Asha Sharma, the new CEO of Xbox, arrived with the ax ready and prepared to cut off heads and, after days of rumors about layoffs and closure of studieswe already have the conclusion. It was expected that this July 6 we would have news about the restructuring of Xbox, the so-called ‘reset’ of the divisionand the figure that draws attention is the 3,200 people who will lose their jobs.
That is not, by any means, the end of the story because since Bloomberg It is pointing to two very hard months for employees, although also a positive note with regard to some of the most reputable studios that it had purchased in recent years.
Asha Sharma and the great Xbox reset
Jason Schreier is one of the most reliable journalists in the video game industry and, as he points out in Bloomberg, in an internal email from Asha Sharma to the members of the company, the CEO ensures that the business “it is not profitable”. Sharma comments that Xbox needs to be “restarted” because they are operating with margins three to ten times lower than comparable businesses.
It is not the first time that Sharma alludes to the disastrous situation of Xbox because the company’s profit margin had fallen to 3% (not that they were losing 3%, but it had fallen, but they were still making money), and after all the motivational messages, the new Xbox commandments and changing the name of the division to XBOX with capital letters, the conclusion to reverse the situation is that drastic decisions had to be made.
According to Schreier, and as has been filtered, Starting today, 1,600 jobs will be eliminatedwhile it will execute another 1,600 over the coming months. In total, 3,200 layoffs at Xbox alone while Microsoft is also cutting 3,200 positions in other sections away from Xbox. 6,400 people sounds outrageous, but it is just 3% of a workforce of 228,000 people.
They are not definitive figures, since Microsoft ensures that They are still in the early stages of the journey. and that there will be more changes ahead in an exercise in austerity to bet on the only thing that seems to excite companies: artificial intelligence. But beyond eliminating so many jobs, the big question of what will happen to the studies was on the table.
The state of Xbox studios
In recent days there has been talk of several studios that could be closed, sold or “released” and at Xataka we have stayed away from those rumors, but now Schreier sheds a little light on the matter. It may seem like a consolation for fools, but Xbox seems like it won’t dismantle them.
Ninja Theory (creators of ‘Hellblade’ and Undead Labs (‘State of Decay’) will be sold to unspecified buyers. The two studios will continue working for the moment on announced games (Senua’ and ‘State of Decay 3’).
Double Fine (Psychonauts’) and Compulsion Games (‘South of Midnight’) will separate and become private studios again. Sharma assures that the two will retain their intellectual properties (thank goodness), but things look uncertain for Arkane Lyon. The studio is developing a ‘Blade’ game, but Microsoft is “reviewing possible strategic options to sell or spin off the studio).
Why is things not clear with Arkane? Because French laws protect more than American ones and Microsoft is exploring the avenues it has. These five studies were never bestsellers, but They were purchased under the management of Phil Spencer to ‘fatten up’ the catalog of a recently presented Game Pass and Sharma now notes that “they created significant value, but they did not grow at the rate we expected.”
The new CEO’s strategy, in fact, seems different from Phil’s. While under his command many (too many) studies were purchasedSharma points to smaller models of supporting independent creators, alluding to the fact that “it is neither possible nor desirable to own all the large independent studios.”
The future of Xbox
To finish, Sharma wants Xbox to reach one billion players daily to see a future in which Xbox is bigger, not smaller.” He assures that “this year we will invest as much in Xbox as ever, but with better focus, greater discipline and clarity, all in the service of making Xbox a place where everyone has a place.”
At the moment, those who have no room are the 3,200 laid off now, which are added to the thousands laid off by Xbox in the last two years. And we will have to wait to see what happens inside ZeniMax, also owned by Xbox and where the developers of big franchises like ‘Wolfenstein’, ‘Fallout’ or ‘The Elder Scrolls’ are located.
We will also have to wait and see what happens to studios that become independent because it is not exactly good news. Without the Microsoft umbrella, it may be difficult for those studios to keep all employees, so be cautious with the futures of Double Fine and Compulsion.
In short, another sad day for the video game industry.
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